Omega Healthcare Investors, Inc.

Good day and welcome to the Health Care Investors second quarter 2021 earnings call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note that today's event is being recorded. At this time, I would like to turn the conference over to Michelle Reber. Please go ahead.

Thank you, and good morning. With me today are Omega's CEO, Taylor Pickett, COO, Dan Booth, CFO, Bob Stevenson, Chief Corporate Development Officer, Stephen Insoft, and Megan Krull, Senior Vice President of Operations. Comments made during this conference call that are not historical facts may be forward-looking statements. such as statements regarding our financial projections, dividend policy, portfolio restructurings, rent payments, financial condition or prospects of our operators, contemplated acquisitions, dispositions or transitions, and our business and portfolio outlook generally. These forward-looking statements involve risks and uncertainties which may cause actual results to differ materially. Please see our press releases and our filings with the Securities and Exchange Commission including, without limitation, our most recent report on Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. During the call today, we will refer to some non-GAAP financial measures, such as NAREIT FFO, Adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles, as well as an explanation of the usefulness of the non-GAAP measures, are available under the financial information section of our website at www.omegahealthcare.com and, in the case of NAE REIT FFO and adjusted FFO, in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega. I will now turn the call over to Taylor.

Thanks, Michelle. Good morning and thank you for joining our second quarter 2021 earnings conference call. Today I will discuss our second quarter financial results and industry occupancy and labor trends. We continue to post strong quarterly results with second quarter adjusted FFO of 85 cents per share and funds available for distribution of 81 cents per share. We have maintained our quarterly dividend of 67 cents per share and the dividend payout ratio remains conservative at 79% of adjusted FFL and 83% of funds available for distribution. Our liquidity and debt maturity ladder have never been stronger as our operators face the uncertain timing of occupancy recovery and widespread labor shortages. As we have discussed in previous calls and investor presentations, the combination of significant occupancy declines and a tight labor market with increasing wages and a shortage of staff, has started to create liquidity issues for certain operators. In June, we had an operator representing 3 percent of annual revenue inform Omega that they would be unable to pay rent due to both occupancy and labor issues. It is possible that additional operators could experience similar cash flow stress. Turning to occupancy and labor trends, since January, occupancy has improved every month, and it is likely that this trend will continue. However, in general, we need occupancy to return to over 80% in order to meaningfully mitigate the cash flow reductions from the pandemic. At the same time that occupancy has started to improve, the labor shortage has created two significant issues. First, a number of facilities have self-imposed admission bans as they cannot staff at clinically appropriate levels. Therefore, even though there is an opportunity to increase census based on demand in the markets, These facilities have elected to limit new admissions due to staffing limitations. Second, wage rates continue to climb. These labor cost increases are particularly difficult to manage in states with limited or no COVID-19 reimbursement relief. Additionally, it appears that these wage increases may create a new baseline wage rate going forward. We strongly believe in the positive long-term prospects for our operating partners as occupancy rebounds and the aging demographics drive increasing demand for skilled nursing facilities. We remain hopeful that the federal government and the states will provide additional near-term support to the skilled nursing facility and assisted living industry as we work to overcome the ongoing challenges from the pandemic. Finally, I again thank our operating partners and, in particular, the frontline caregivers and staff who have cared for the tens of thousands of residents within our facilities. I will now turn the call over to Bob.